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HomeMy WebLinkAbout75A - PH - BONDS NOVA ACADEMYREQUEST FOR COUNCIL ACTION � / 6T CITY COUNCIL MEETING DATE: JUNE 7, 2016 TITLE: CLERK OF COUNCIL USE ONLY: APPROVED {STRATEGIC PLAN NO. 3,21 CITY MANAGIR' RECOMMENDED ACTION CONTINUED TO FILE NUMBER Conduct a Tax Equity and Fiscal Responsibility Act Hearing in consideration of the issuance of tax - exempt bond financing by the California Municipal Finance Authority on behalf of the Nova Academy Children's Foundation, Inc., for the benefit of NOVA Academy Early College High School, to finance the costs of (a) acquiring land and education and related facilities located at 500 W. Santa Ana Blvd., City of Santa Ana, County of Orange, California, for use by Nova Academy Early College High School, currently serving students in grades 9 -12; (b) funding a debt service reserve fund for the Bonds; (c) paying capitalized interest on the Bonds; and (d) paying certain Bond issuance expenses (collectively, the "Project "). 2. Adopt a resolution approving the issuance of revenue bonds by the California Municipal Finance Authority in an amount not to exceed $19,000,000 (the "Bonds ") for the purpose of financing or refinancing the acquisition, construction and improvement of certain educational facilities. DISCUSSION The proceeds of the Bonds will be used by Nova Academy Facilities, LLC (the "Borrower"), the sole member of which is the Nova Academy Children's Foundation, Inc., (the "Foundation "), for the benefit of Nova Academy Early College High School (the "Lessee'), pursuant to a plan of financing for the Project, as defined above, in the approximate amount of $19,000,000 to finance the costs of (a) acquiring land and education and related facilities located at 500 W. Santa Ana Blvd., City of Santa Ana, County of Orange, California (the "Facilities "), for use by Nova Academy Early College High School, currently serving students in grades 9 -12; (b) funding a debt service reserve fund for the Bonds; (c) paying capitalized interest on the Bonds; and (d) paying certain Bond issuance expenses. 75A -1 ❑ As Recommended PUBLIC HEARING ON ISSUANCE OF TAX EXEMPT ❑ As Amended ❑ Ordinance on Reading BONDS FOR THE BENEFIT OF NOVA ACADEMY El Ordinance on 2 Reading EARLY COLLEGE HIGH SCHOOL AND RESOLUTION ❑ Implementing Resolution APPROVING THE ISSUANCE OF BONDS ❑ Set Public Hearing For {STRATEGIC PLAN NO. 3,21 CITY MANAGIR' RECOMMENDED ACTION CONTINUED TO FILE NUMBER Conduct a Tax Equity and Fiscal Responsibility Act Hearing in consideration of the issuance of tax - exempt bond financing by the California Municipal Finance Authority on behalf of the Nova Academy Children's Foundation, Inc., for the benefit of NOVA Academy Early College High School, to finance the costs of (a) acquiring land and education and related facilities located at 500 W. Santa Ana Blvd., City of Santa Ana, County of Orange, California, for use by Nova Academy Early College High School, currently serving students in grades 9 -12; (b) funding a debt service reserve fund for the Bonds; (c) paying capitalized interest on the Bonds; and (d) paying certain Bond issuance expenses (collectively, the "Project "). 2. Adopt a resolution approving the issuance of revenue bonds by the California Municipal Finance Authority in an amount not to exceed $19,000,000 (the "Bonds ") for the purpose of financing or refinancing the acquisition, construction and improvement of certain educational facilities. DISCUSSION The proceeds of the Bonds will be used by Nova Academy Facilities, LLC (the "Borrower"), the sole member of which is the Nova Academy Children's Foundation, Inc., (the "Foundation "), for the benefit of Nova Academy Early College High School (the "Lessee'), pursuant to a plan of financing for the Project, as defined above, in the approximate amount of $19,000,000 to finance the costs of (a) acquiring land and education and related facilities located at 500 W. Santa Ana Blvd., City of Santa Ana, County of Orange, California (the "Facilities "), for use by Nova Academy Early College High School, currently serving students in grades 9 -12; (b) funding a debt service reserve fund for the Bonds; (c) paying capitalized interest on the Bonds; and (d) paying certain Bond issuance expenses. 75A -1 TEFRA Public Hearing for Nova Academy Early College High School June 7, 2016 Page 2 The Project and Facilities are to be owned and operated by the Borrower, the sole member of which is the Foundation, a corporation solely organized and existing under the laws of the State of California and described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, for the benefit of the Lessee. The Borrower has requested the assistance of the California Municipal Finance Authority (the "Authority "). The Authority, which was established in 2004, was formed to assist local governments and non - profit organizations and businesses with the issuance of taxable and tax exempt bonds with the goal to promote economic, cultural, and community development. The City is a member of the Authority. However, in order for all or a portion of the Bonds to qualify as tax - exempt bonds, the City must conduct a public Tax Equity and Fiscal Responsibility Act Hearing (the "TEFRA Hearing ") providing for the members of the community an opportunity to speak in favor of or against the use of tax - exempt bonds for the financing of the Project. Following the close of the TEFRA Hearing, an "applicable elected representative" of the governmental unit hosting the Project, in this case the City Council, must provide its approval of the issuance of the Bonds by the Authority for the financing of the Project. The Bonds to be issued by the Authority are the sole responsibility of the Borrower. The City has no financial or legal liability for the project or repayment of the Bonds, and the Bonds do not constitute any type of indebtedness for the City. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal #3 — Economic Development, Objective #2 (Create new opportunities for business /job growth and encourage private development through new General Plan and Zoning Ordinance policies). FISCAL IMPACT The Authority shares 25 percent of all issuance fees directly with its member communities. With respect to the City of Santa Ana, it is expected that 25 percent of all issuance fees for this project attributable to the City will be granted by the Authority to the City. Upon receipt, the funds will be deposited in the Micellaneous Revenues, Miscellaneous Recoveries Revenue Account (no. 01102002 - 57010). Robert Cortez Special Assistant to the City Manager City Manager's Office Exhibits: 1. Public Notice 2. TEFRA Resolution APPROVED AS TO FUNDS AND ACCOUNTS: Francisco Gutierrez 00 Executive Director Finance & Management Services Agency 75A -2 NOTICE OF PUBLIC HEARING NOTICE IS HEREBY GIVEN that on June 7, 2016 a public hearing as required by Section 147(f) of the Internal Revenue Code of 1986 will be held by the City of Santa Ana (the "City ") with respect to the proposed issuance by the California Municipal Finance Authority (the "Authority ") of its revenue bonds in one or more series in an aggregate principal amount not to exceed $19,000,000 (the `Bonds "). The proceeds of the Bonds will be used by Nova Academy Facilities, LLC (the "Borrower "), the sole member of which is the Nova Academy Children's Foundation, Inc., (the "Foundation "), for the benefit of Nova Academy Early College High School (the "Lessee "), pursuant to a plan of financing for the Project, as defined above, in the approximate amount of $19,000,000.00 to finance the costs of (a) acquiring land and education and related facilities located at 500 W Santa Ana Blvd., City of Santa Ana, County of Orange, California (the "Facilities "), for use by the Nova Academy Early College High School, currently serving students in grades 9 -12; (b) funding a debt service reserve fund for the Bonds; (c) paying capitalized interest on the Bonds; and (d) paying certain Bond issuance expenses. The Project and Facilities are to be owned and operated by the Borrower, the sole member of which is the Foundation, a corporation solely organized and existing under the laws of the State of California and described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, for the benefit of the Lessee. The Borrower has requested the assistance of the California Municipal Finance Authority ( "Authority "). The Authority, which was established in 2004, was formed to assist local governments and non -profit organizations and businesses with the issuance of taxable and tax exempt bonds with the goal to promote economic, cultural, and community development. The City is a member of the Authority. However, in order for all or a portion of the Bonds to qualify as tax - exempt bonds, the City must conduct a public Tax Equity and Fiscal Responsibility Act Hearing (the " TEFRA Hearing ") providing for the members of the community an opportunity to speak in favor of or against the use of tax- exempt bonds for the financing of the Project. Following the close of the TEFRA Hearing, an "applicable elected representative" of the governmental unit hosting the Project, in this case the City, must provide its approval of the issuance of the Bonds by the Authority for the financing of the Project. The Bonds to be issued by the Authority are the sole responsibility of the borrower. The City has no financial or legal liability for the project or repayment of the Bonds, and the Bonds do not constitute any type of indebtedness for the City. The Bonds and the obligation to pay principal of and interest thereon and any redemption premium with respect thereto do not constitute indebtedness or an obligation of the Authority, the State of California or any political subdivision thereof, within the meaning of any constitutional or statutory debt limitation, or a charge against the general credit or taxing powers of any of them. The Bonds shall be a limited obligation of the Authority, payable solely from certain revenues duly pledged therefor and generally representing amounts paid by the Borrower. The hearing will commence at 5:30 p.m. or as soon thereafter as the matter can be heard, and will be held in the City Hall Council Chamber of the City of Santa Ana, 22 Civic Center Plaza, Santa Ana, California 92701. Interested persons wishing to express their views on the issuance of the fV%RA TJ Bonds or on the nature and location of the facilities proposed to be financed may attend the public hearing or, prior to the time of the hearing, submit written comments to the Cleric of the Council at the address indicated below. Additional information concerning the above matter may be obtained from, and written comments should be addressed to, Clerk of the Council, City of Santa Ana, 20 Civic Center Plaza, 8th Floor, Santa Ana, California 92701. Dated: May 24, 2016 010 -8178- 1561/5 /AMERICAS 75A -4 RESOLUTION NO, 2016 -XXX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA APPROVING THE ISSUANCE OF REVENUE BONDS BY THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY IN ONE OR MORE SERIES IN A MAXIMUM AMOUNT OF $19,000,000 FOR THE PURPOSE OF FINANCING THE ACQUISITION OF CERTAIN FACILITIES FOR THE BENEFIT OF NOVA ACADEMY CHILDREN'S FOUNDATION OR AN AFFILIATE THEREOF WHEREAS, pursuant to Chapter 5 of Division 7 of Title I of the Government Code of the State of California (the "Act "), certain public agencies (the "Members ") have entered into a Joint Exercise of Powers Agreement Relating to the California Municipal Finance Authority, dated as of January 1, 2004 (the "Agreement ") in order to form the California Municipal Finance Authority (the "Authority "), for the purpose of promoting economic, cultural and community development, and in order to exercise any powers common to the Members, including the issuance of bonds, notes or other evidences of indebtedness; and WHEREAS, the City of Santa Ana, California (the "City "), is a Member of the Authority; and WHEREAS, the Authority is authorized to issue and sell revenue bonds for the purpose, among others, of financing or refinancing the construction of capital projects; and WHEREAS, NOVA Academy, a California nonprofit public benefit corporation ( "NOVA "), has applied for financing corder the Act, for the purpose of financing the acquisition, construction, expansion, remodeling, renovation, improvement, furnishing, and equipping of certain charter school educational facilities to be owned by NOVA Academy Facilities, LLC, a California limited liability company (the "Borrower "), the sole member of which is Nova Academy Children's Foundation, Inc., a California nonprofit public benefit corporation (the "Foundation "), and leased to NOVA (the "Lessee ") for the use and occupancy of NOVA Academy Early College High School, a charter school established pursuant to the Charter Schools Act of 1992 (Part 26,8 of Division 4 of Title 2 of the Education Code); and WHEREAS, the Lessee has requested that the Authority issue and sell revenue bonds in the maximum principal amount of $19,000,000.00 (the "Bonds ") in one or more series for the purpose of making a loan to the Borrower to finance the costs of (a) acquiring land and education and related facilities located at 500 4B Santa Ana Blvd., City of Santa Ana, County of Orange, California (the "Facilities "), for use by the Lessee, currently serving students in grades 9 -12; (b) funding a debt service reserve fund for the Bonds; (c) paying capitalized interest on the Bonds; and (d) paying certain Bond issuance expenses (collectively, the "Project "); and WHEREAS, the Borrower will lease the Facilities to the Lessee pursuant to a. Lease Agreement dated as of August 1, 2016 (or such other data as approved by the Authority) (the "Lease "); and WHEREAS, Section 4 of the Agreement provides that the Authority shall not issue bonds with respect to any project located in thejuuisdiction of one or more member agencies unless the governing body of any such member, or its duly authorized representative, shall approve, conditionally or unconditionally, the project, including the issuance of bonds therefor; and I id WHEREAS, the Authority has requested that the City Council of the City of Santa Ana approve the issuance of the Bonds by the Authority in order to satisfy the requirements of Section 4 of the Agreement; and WHEREAS, it is in the public interest and for the public benefit that the City Council approve the issuance of the Bonds by the Authority for the aforesaid purposes; and WHEREAS, the City Council has, following notice duly given, held a public hearing regarding the issuance of the Bonds, and now desires to approve the issuance of the Bonds by the Authority; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA, AS FOLLOWS; Section 1. The foregoing resolutions are true and correct. Section 2. The City Council hereby approves the issuance of the Bonds by the Authority. It is the purpose and intent of the City Council that this resolution constitute approval of the issuance of the Bonds in accordance with Section 4 of the Agreement, Section 3. The issuance of the Bonds shall be subject to the approval of the Authority of all financing documents relating thereto to which the Authority is a party. The City shall have no responsibility or liability whatsoever with respect to the Bonds. Section 4. The adoption of this Resolution shall not obligate the City or any department thereof to (i) provide any financing to acquire, rehabilitate or improve the Project or any refinancing of the Project; (ii) approve any application or request for or take any other action in connection with any planning approval, permit or other action necessary for the acquisition, rehabilitation or operation of the Project; (iii) make any contribution or advance any funds whatsoever to the Authority; or (iv) take any further action with respect to the Authority or its membership therein. Section 5. The authorized signatories, the City Clerk and all other proper officers and officials of the City are hereby authorized and directed to execute such other agreements, documents and certificates, and to perform such other acts and deeds, as may be necessary or convenient to effect the purposes of this Resolution and the transactions herein authorized. Section 6. The Clerk shall forward a certified copy of this Resolution to the Authority in care of its counsel: Ronald E. Lee, Esq. Jones Hall 650 California Street, 181h Floor San Francisco, CA 94108 Section 7. This resolution shall take effect immediately upon its passage. 75A -6 ADOPTED by the City Council of the City of Santa Ana at a regular meeting of the City Council hold on the day of 2016, by the following vote: AYES: NOES: ABSTAIN: ABSENT: Miguel A. Pulido Mayor APPROVED AS TO FORM: Sonia R. Carvalho, City Attorney By: John .Funk Assistant City Attorney CERTIFICATE OF ATTESTATION AND ORIGINALITY I, MARIA D. I-IUIZAR, Clerk of the Council, do hereby attest to and certify the attached Resolution No. 2016 -XXX to be the original resolution adopted by the City Council of the City of Santa Ana on June 7, 2016. Cleric of the Council City of Santa Ana 3 75A -7 75A -8